The Intriguing Shift in Warren Buffett’s Oil Holdings

warren-buffett-oil-holdings

Four times per year we get a glimpse at what billionaire Warren Buffett and his Berkshire Hathaway (NYSE: BRK.B) bought and sold in the previous quarter. Yesterday was one of those four days out of the year, and the latest 13F filing reveals some interesting transactions concerning the portfolio’s oil stocks.

The Oracle of Omaha sold 41 million shares of ExxonMobil (NYSE: XOM) between October and December 2014, completely exiting a stake that was worth between $3.9 billion and $3.5 billion, depending on when the transactions took place.

Buffett also sold Berkshire Hathaway’s entire 5 million share position in ConocoPhillips (NYSE: COP) last quarter, a stake worth somewhere between $380 million and $300 million, depending on when the transactions took place.

Before you assume that these moves are clear signs that Warren Buffett wants out of oil stocks, there are a few things you should know.

For starters, Buffett and his team at Berkshire Hathaway actually increased their position in Suncor Energy (NYSE: SU), boosting its existing stake by 27%. The firm also left its positions in National Oilwell Varco (NYSE: NOV) and Phillips 66 (NYSE: PSX) unchanged.

It is also important to note that while this data was just released, it is far from fresh.

We have to take data from 13F filings with a grain of salt, as these filings aren’t meant to tell investors exactly what the reporting firm owns right now. Instead, 13F filings are merely a snapshot of what the firm owned on the final day of the quarter in question. Though this hasn’t been the case with Warren Buffett and Berkshire Hathaway, 13F filings can be manipulated if a firm initiates or exits certain positions leading up to the final day of the quarter. This is called “window dressing.”

Even in the best-case scenario, firms typically use all of the 45-day window in which they have to file their 13F. As such, the data is generally a month and a half old by the time it is released to the public.

I don’t mean to discount the importance of the 13F – it is really the only way that individual investors can gain insight into what hedge funds and big investment funds like Berkshire Hathaway are buying, selling and holding.

This latest Berkshire Hathaway 13F offers us a glimpse at what Berkshire Hathaway owned at the end of the fourth quarter of 2014. We can then compare that to what Berkshire Hathaway owned at the end of the third quarter.

Here’s a closer look at which oil stocks Berkshire Hathaway bought, sold and held between October and December 2014.

2.17.15 BRK.B 13F

When you compare the metrics that I included in this table – dividend yield, price-to-earnings ratio, forward price-to-earnings ratio and share price decline during the broader collapse in oil stocks – there isn’t a particular pattern that jumps out at me.

What does jump out at me is that, while Warren Buffett did increase his position in one oil stock, he reduced his portfolio’s exposure to the oil market from approximately $5.5 billion to $1.5 billion. It would be fair to interpret Buffett’s moves as a lack of confidence in oil stocks. At the very least, it’s clear that he has lost confidence in ExxonMobil and ConocoPhillips.

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Published by Wyatt Investment Research at